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Day 43 - Responding to former state senator Karl Swan

In Sunday’s Tribune, former Utah state senator Karl Swan (D -Tooele) inaccurately disputed some comments made previously in the Tribune by House Majority Leader Rep. Dave Clark (R-Santa Clara).

Swan incorrectly suggested the following:

- False claim #1: Recent increases in Utah per student spending are possibly “no more than a maintenance of the status quo” because recent increases may not offset increases in enrollment and inflation

- False claim #2: Utah doesn’t need to double income taxes in order to reach the national average. (Actually, Swan employs a “straw man” argument and argues that Utah doesn’t need to double income taxes to make a “significantly stronger commitment” to public education, even though Clark’s original comment specifically referred to increasing Utah spending to the national average. Click
here to read a good definition of straw man argument in Wikipedia.)

- False claim #3: The high percentage of public land ownership does not hinder Utah’s ability to fund education because Utah’s economy benefits from mineral lease revenues from federal lands and Utah receives payment from the federal government to offset the federal government’s tax exempt status.

We’ll address the first point next week in our Taxing Times newsletter once we receive the final budget numbers. However, one thing is clear at this point: recent education increases have been huge and will more than offset inflation and population growth.

What would it take to reach the national per student spending average?
Rep. Clark is right on this issue. Utah would need to double individual income taxes (or the dollar-equivalent thereof in some other form of taxes such as property taxes) to reach the national per student spending average. The math is very straight forward.

According to the National Center for Education Statistics (NCES), spending per student in 2004 was as follows

U.S. . . . . . . . .$8,310
Utah . . . . . . . .$4,991
Difference. . . . $3,319

Also according to NCES, Utah’s enrollment was 495,981 in FY04. Multiplying Utah’s enrollment by the difference in per student spending yields $1,646,160,939.

According to the Utah State Tax Commission, Utahns paid $1,699,183,228 in individual income taxes in FY2004. Therefore, adding an $1,646,160,939 to FY2004’s income tax collection would be a 96.9% increase, or virtually doubling income taxes.

Of course, the needed increase varies slightly from year to year, and the amount varies depending on whose numbers are being used (NCES, Census, NEA). Using the NEA’s numbers for FY05, the would-be increase in individual income taxes would be 92.7%, or nearly doubling income taxes.

A 96.9% increase in individual income taxes would be significant. According to calculations by the Utah Taxpayers Association, a Utah family of four with an income of $62,032 (the median income for a Utah family of four according to the Census Bureau), pays about $2,300 in individual income taxes under the system that was passed in the last special session (assumes deductions equal 20% percent of AGI excluding state income taxes paid). A 96.9% increase would mean that a typical Utah family of four would have to pay an additional $2,224 per year.

Property taxes would have to be increased on top of that in order to build hundreds of new school buildings to accommodate the additional teachers being hired.

What about the public lands issue?
Swan argues that Utah benefits from federal land ownership due to mineral lease payments and therefore is not being harmed by the federal government’s tax exempt status.

However, land is generally subject to property taxes even if it generates an economic benefit. For example, businesses are subject to property taxes (unless they get an RDA in which their property taxes are rebated back to the business) even though they create jobs, goods, and services and pay corporate income taxes and sales taxes on inputs.

Swan also mentioned that Utah receives in payment in lieu of taxes from the feds. In 2006, it was barely more than $20 million, a small amount considering how much land the feds own in Utah.

Finally, contrary to Karl Swan's claims, Rep. Clark's comments on New Jersey were not based on information that the Utah Taxpayers Association provided to him.


Mike Jerman
Andrew Stephenson

I like how you distanced yourself from Clark's comments on New Jersey. Are you saying that Clark is wrong on that?

Once the session is over, you should devote a blog entry addressing Swan's argument that the Utah Foundation is "nonpartisan" unlikne the taxpayers association. That one made me laugh.

I heard Steve Kroes (the Exec Director of Utah Foundation) say in a radio interview that last year's 12% increase in public ed funding wasn't an increase because the percent of the state budget going to public ed didn't increase as well. Is that a new standard in math for determining what equals an increase? I must have missed that lesson.

So maybe Utah Foundation is "non-partisan," but the argument it made above was definitely "non-thoughtful."

Dave,

Thanks for your comments.

We have a good relationship with Steve Kroes and the Utah Foundation. We respect their abilities and character, and we frequently talk about policy issues. However, our two organizations obviously look at things very differently in many cases.

While the Utah Foundation focuses primarily on whether government has enough money, our focus is on whether government could be spending our money better. That's why we support education reform measures such as vouchers, charter schools, differential pay, merit pay, and UBSCT vouchers. While the Utah Foundation does not oppose these reforms, they don't advocate for them either.

The same is true for transportation reform. We support congestion pricing, rails/roads prioritization, and corridor preservation. Again, the Foundation does not oppose these, but they don't advocate for them either.

However, the Foundation has been working on health care reform, and hopefully some good ideas on controlling costs will come out of this.

As far as the "non-partisan" issue goes, we're as non-partisan as the Utah Foundation and the Salt Lake Tribune. Nevertheless, we all have our own agendas, and the Utah Taxpayers Association has never been bashful about having an agenda and what that agenda is: lower taxes, sound tax policy, economic growth, and efficient use of tax dollars.

our focus is on whether government could be spending our money better

This statement says it all, the Utah Taxpayers Association doesn't think investing in the education of our children is money well spent. They don't care to think of the consequences of an uneducated population or the ramifications on our economy.

The Utah Taxpayers Association doesn't seem to care if all of Utah's children receive a good education as long as they are controlled by the voucher advocates they have bought their support. Vouchers do not provide a solution to the education needs of our state but rather cater to the rich that could careless about the vitality of our entire education system.

It is really sad that the Utah Taxpayer Association has stopped looking out for our tax dollars and instead is looking out for the rich that can evidently buy off an entire organization.

Marshall,

Are you suggesting that anyone or any organization that wants to see tax dollars spent efficiently or better is "against public education"?

From your perspective, it really is about how much we spend, not how efficiently we spend tax dollars or how much we accomplish with those tax dollars, isn't it?

As far as the rich and vouchers go, the low income receive the largest vouchers, the rich the smallest. And yes, the poor will be able to attend a private school with a $3,000 voucher. The Catholic school system is the largest private school system in Utah and their tuition is affordable to low income people with a $3,000 voucher.

Then of course there is Children First Utah which offers scholarships to low income families.

While you are at it why don't you find out how many open seats Catholic school system has available - we'll call that available supply.

Now why don't you tell me the amount of the kids that might potentially use these vouchers, even to pay part of the tuition because they would still be using the limited supply - we'll call that potential demand.

Now why don't you tell me the difference between supply and demand and then with the infinite economic knowledge on this blog, tell me how the market might act to correct the difference between those two numbers, throw in the 375 some odd scholarships from Children First Utah if it makes you feel better.

Then return the money you take from voucher advocates that goes to your organization, clear your conscience and start instead advocating good policy that will actually do something to protect our tax dollars and provide a good education to all of Utah's children. I think you and I will both feel better.

But never fear, Democracy is here and the voters of our state will get the final say on the education of our children

Marshall,

You keep bringing up the same point, and I keep refuting it, but here we go again.

According to your logic, increases in demand are not met with increases in supply. If that were the case, only a handful of people would own computers, calculators, etc and they would be paying a million dollars for each one because supply did not respond to demand.

But we know that did not happen. As demand increased, so did supply.

How do you explain the existing private school supply in the first place? Because there was/is demand, that's why. Now with vouchers, more households will have the means to attend private schools. This will increase demand. Why do you assume that private schools won't repsond? Why did they respond in the first place when these schools were created?

And that additional supply will be added to the bottom of the quality scale while the more quality schools are priced out of the reach of us common folk. This is just like any other premium product. Do they sell tiffany jewelery at walmart prices? The product with the better reputation in the market place will demand a higher price.

What is the average age of a quality college and why would it be any different for other types of schools?

Look at my previous comments - my point has always been that there currently isn't sufficient supply and the new supply will be lower quality schools that will be the only ones that the poorer students will be able to afford.

Us common folk are going to be stuck in the Walmart special of schools while the rich get a 500 dollar taxpayer subsidy to make sure their precious kids don't have to hang out with our brats.

What's astonishing is that you are advocating this subsidy, you want our tax dollars to be used in this fashion. Simply amazing.

There is no rational basis to suggest that the new schools will be low quality. When increased demand leads to higher supply in every thing else, the new supply is not "low quality".

Besides, much of the new capacity will be provided by existing private schools.

Besides, where is your proof that private schools don't have additional existing capacity? A couple of years ago, a survey of private schools was done for the Gov. Leavitt's Employers Education Coalition, and that survey showed that private schools were at 75% capacity, which means that they could increase enrollment by 33%. This survey is being updated as we speak.

Your subsidy comments are interesting. Public education itself is a subsidy. Most taxpayers do not earn enough money to pay enough taxes to educate their children in public schools. The top 1% of income tax payers pay about 20% of total state income tax (plus or minus a couple percentage points depending on the year. In good times, it's higher. In recessions, it's lower). The top 10% pay about 50% of total state income taxes.

There is no rational basis to suggest that the new schools will be low quality.

Can I make a comparison to the existing college system? Is that rational?

I have stated this several times, let me state it again - What is the average age of a quality college and why would it be any different for other types of schools?

Marshall,

College capacity since WWII has been addressed not through the creation of new colleges but by the expansion of existing colleges, public and private.

Universities are much more expensive to open and operate than K-12 private schools. Not surprisingly, Utah has seen more private K-12 schools open in recent decades than new colleges.

With the creation of the GI bill(a voucher for veterans) at the end of WWII, universities were swamped with returning veterans. It was the biggest influx of college students in history. Pell Grants also played a role in increased higher education enrollment.

At first, universities struggeled to keep up with demand. But, as predicted, supply reacted to increased demand.

Much of this demand was accommodated by the public universities but also by private (BYU's enrollmend skyrocketed in the years following WWII).

Also, public universities compete much more rigorously against each other and against private universities than public schools do.

Voucher opponents like to talk about "public school choice", but naturally public school choice is limited to those schools that have vacancies. With the exception of east side Salt Lake County schools, public school choice is not an option in most Utah districts.

And most of that increased college capacity after WWII has came from investments in public universities. Once investments in public education have decreased over the years we have seen huge jumps in college tuition.

I was lucky enough to graduate with a business degree but I see how tuition has increased two and three times inflation and I wonder how young people can afford college these days.

It doesn't seem fair to me that there are so many hurdles to doing the one thing that is fundamental to living the American dream and that is a college education. Now you want to do the same thing to primary education.

Part of the reason I am so against vouchers is I could easily see the same dynamic we see in our college system playing out with vouchers, where you have one level of schools the rich can afford and another level of schools everyone else can afford. This is what the free market does, it can and will discriminate and exclude and marginalize those without the resources to pay for a premium product, that situation might be ok when you are selling cheeseburgers but I feel it is unacceptable with something as basic to our Democracy as free public education.

You will argue that new schools will emerge to fill the gaps which will inevitable be true but I don't trust the quality of these schools. You will say well the parent will judge the quality but when you can only afford one level of quality then your options aren't a broad as you want parents to think. Luckily public schools will still be there to take these parents back but now I get back to original point I have made where poorer students will be stuck in one level of quality while we give a subsidy to richer parents to afford another level of quality.

You can talk about parent choice until you are blue in the face but when all you can afford is McDonalds it doesn't matter if you are unhappy with the quality, sure you could go to Burger King but you are ultimately stuck at that one level of quality. The only way you can get a better burger is to pay more and the only way to go to a better quality school is to pay more. You are trying to convince people like this that replied on our community blog that she will get something for nothing and its sad.

We can agree to disagree but I will do everything in power to make sure the people of Utah understand the issue in front of them.

Marshall,

1. You are taking a huge leap of faith. The huge increases in Utah college tuition is attributable to diversions of general fund dollars to transportation and health and human services. I suspect the same is true in other states. This has nothing to do with choice or vouchers. Apples and oranges.

2. You sound like you are arguing against Pell Grants and the GI Bill.

3. A means-tested voucher in which low income families receive the largest vouchers addresses the two-level issue. Would you change your mind if the voucher were exclusively restricted to the poor? Would you support it then?

4. Most of the low income voucher students will go to Catholic schools. Are you saying that Catholic schools are low quality, at least compared to the public schools where these low income students would have attended?

5. Btw, I can't believe I haven't mentioned this previously, but you seem to have forgotten that we have some low quality public schools (and some very good ones and mediocre ones as well). You worry about low quality private schools, but we have some low quality public schools and PLEASE PLEASE don't tell me that the solution to the low quality public schools is more money. Washington DC and other big city school districts have proven that doesn't work.

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